Govt approaches PC for Neelum Jhelum validation

ISLAMABAD - Instead of approaching international experts for the third party validation of the Neelum Jhelum Hydropower Project (NJHP), the Ministry of Water and Power is likely to get the task done by the Planning Commission.

The ministry has requested the Ministry of Planning to conduct the third party validation of NJHP, official sources told The Nation here on Sunday.

The Executive Committee of the National Economic Council (ECNEC) in principle has approved the project and linked it to the third party validation by a panel of international experts.

Under the directive of the ECNEC, the third party validation committee of Neelum Jhelum will be constituted, which will oversee the hiring process of an international panel of experts and their work.

“But so far no international tender has been invited, and the Ministry of Water and Power has requested the PC to do the audit,” the source added.

NJHP is located in the vicinity of Muzaffarabad. It envisages the diversion of Neelum River water through a tunnel out-falling into Jhelum River.

The intake Neelum-Jhelum is at Nauseri, 41km east of Muzaffarabad, and has an installed capacity of 969MW. The project was originally estimated to cost Rs130 billion in 2007, which went up to Rs274 billion in 2012, partly because of changes in specifications, arising out of geographical changes following the devastating earthquake of 2005.

The issue was earlier raised by the PC, as it had asked the government to conduct audit of the previous developmental work on the NJHP, prior to the approval of the new expenditures.

A revised PC1, regarding increase in the cost of the NJHP, moved by the project management along with the PC reservations, was forwarded for the ECNEC’s approval.

“The energy wing of the Ministry of Planning asked for an independent assessment of the NJHP claims and demands. In its note on the PC1, the Planning Commission has raised questions and asked for the evaluation of the completed work and demand for the escalated cost,” the source informed.

The delay in the construction, combined with some other factors, caused escalation in the cost of the project.

In 2012, the total revised cost of the project was estimated to be Rs274b but due to certain factors, including delay, depreciation in rupee value, imposition of tax and duties on the import of machinery, buying latest boring machine increased the total cost of the project, and it went up to Rs418 billion.

For example for the early completion of the project a tunnel boring machine was purchased in 2013, which cost Rs12 billion.

Similarly, earlier, the management of Neelum Jhelum hydropower project did not include the tax and duties on the import of the machineries and equipments in their initial estimates.

The devaluation of rupee against the US dollar is also one of the reasons for increase in the cost. Moreover a big chunk of the cost will also go to interest.

Soon after assuming the charge as Prime Minister in 2013, Nawaz Sharif issued directives for its completion by December 2015. But later, due to funds shortage the project was delayed and the deadline for the completion was rescheduled twice: first in December 2016 and then in the first quarter of 2017.

Earlier, the energy wing refused to conduct the validation but after the ministry’s insistence now it has been decided to conduct the audit.

“The energy wing is seeking the permission of the planning minister and if they are allowed then they will accept the responsibility” the source said.

When asked the cost of the third party validation through international panel, the source said that it was going to cost Rs40 to 50 million.

The source said that if the permission was granted, they are going to complete the audit in 90 days.

When asked what necessitated the government for the validation of the project which is near completion, the sources said that the revalidation of cost is necessary to stop future bottleneck in project implementation and the repeat of mistakes.